Default

Default occurs after delinquency where the borrower is unable to make any payments even after the grace period. If the delinquency persists and the borrower fails to bring the account current, it eventually leads to default. 

The grace period can vary depending on the loan agreement and local regulations but often ranges from 60 to 180 days. When a borrower defaults on a loan, it triggers a series of consequences, which may include collection efforts, legal actions and negative impact on the borrower’s credit score.